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The Future of the U.S. Real Estate Market (Part 2)

Taken from the January 2012 Intelligent Investor
 
This is a continuation from Part 1 of this 3-part series. Click here to read Part 1.
 
Historical Examination of Home Ownership Rates
The home ownership rate was fairly stable prior to WWII, ranging from about 43% to 48%. During the Great Depression, Washington created numerous subsidies in order to boost demand (e.g. government-insured loans from the VA).
By the late 1960s, home ownership soared to nearly 64% where it would largely remain for several decades, buttressed by several additional subsidies and a transformation in housing finance.
The baby boom effect also led to the surge in home ownership. Since most first-time homebuyers are between 25-40 years of age, most baby boomers bought their first home in the 1970s.
After experiencing a large drop in home ownership rates in the 1980s (the reasons are mixed; some say inflation, others say tax rate cuts, others say reduced affordability), the 1990s was the period of the housing boom.

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